Things to Never Say to a Dealer
How Dealers Operate
Buying a Car on Your Terms
Calculating Dealer Cost
Helpful Suggestions When Buying A New Car
Keep these in mind when purchasing a new vehicle from a dealership to help you along with your negotiations.
“I’m ready to buy now.”
This is an admission of weakness and an invitation for the dealer to throw out a price that’s slightly below the manufacturer’s suggested retail price (MSRP) to see if you’ll take the bait. It shows that you’re too eager and willing to consider an offer, and it also gives salespeople the advantage by allowing them to talk you up as opposed to you talking them down. But by adding some very precise parameters, you’ll sound confident and strong from the start. There are two schools on negotiating. Going into the process, Gentile reminds consumers to be wary of the dealer cost.
Consumer Reports has something called wholesale price, which is the normal dealer invoice price minus all relevant rebates and incentives. Similarly, most longstanding price-information services advise buyers to research the dealer invoice, along with any relevant incentives, then make a lowball offer that’s maybe just a few hundred dollars above invoice. The dealer will follow your figure with a counteroffer that then allows you to go back and forth until there is a compromise.
Conversely, a second school believes that making the first offer puts the buyer in a weak position. “When you make an offer on a car, you’re digging yourself into a hole,” says James “Spike” Bragg, a consumer advocate and founder of Fighting Chance, an information service for new-car buyers. “Your offer will be as good as it gets. There’s so much today in ‘under the radar’ sales incentives to dealers, you don’t want to limit yourself.”
According to Bragg, many of the dealer incentives today are awarded on a dealer-by-dealer basis, often handed out for meeting sales targets. Because of this, you can’t pin down these incentives on a particular vehicle, and you never know which dealership might be able to provide the better price at a given time.
Bragg’s method involves faxing or emailing quote requests to several different dealerships and asking them for their best bottom-line price on a particular model. His clients sometimes manage to negotiate prices below invoice, even considering all published incentives. In this day of increased under-the-radar incentives, this method doesn’t limit you to a bottom line and certainly has its merits if you’re willing to put in the effort.
“I can afford this much per month.”
Don’t allow the dealership to pull a credit report on you. Once the dealership knows your credit score it can affect negotiations for the car you’re interested in buying. It’s better to tell the salesperson that all you’re interested in is getting the best price for the vehicle. “Don’t tell the dealer what you’re willing to pay per month. This is the biggest mistake a shopper can make. Often the dealer will focus on a monthly payment scheme, insisting you are receiving a great deal, but at the end of the day you won’t really know what you paid, advises Gentile.
If the dealer can get a number out of you, a common trick is to ask if you can squeeze out a slightly higher monthly payment, then raise the bottom-line price accordingly by hundreds or even thousands. Avoid this by insisting that you focus only on the purchase price. Walk away if the salesperson only wants to talk in monthly payments.
“Yes, I have a trade-in.”
Try not to tell salespeople you have a trade-in until a final purchase price is set. Then ask the dealer how much they’ll give you for a trade-in. If you begin negotiations with a trade-in the dealer may try to distract you with the “great” deal they’re giving you on your trade-in while giving you a “poor” deal on the new vehicle you are buying. Its best to call the Credit Union and we’ll tell you a fair price for your trade-in before you even visit the dealership.
“You’ll see games being played – they’ll play one off on the other,” Gentile says. Once you’ve decided on a sale price, then you can see what they’ll give you for your old car.
“I’m only buying the car with cash.”
Car dealers make a significant chunk of added profit when they sell you financing. If you don’t at least leave the dealer with the possibility that he or she might sell you financing, you simply won’t be getting the best deal. Bragg recommends saying something like “lets negotiate the price of the new vehicle first and then we can discuss financing”.
It’s best to be noncommittal with financing, but it’s a good idea to line up tentative financing with MAFCU before you go car shopping. Once you know you’re approved financing becomes one less thing to worry about.
“I’m not sure…which model do you think I need?”
If you’re this undecided, you may end up driving away in a vehicle you neither wanted nor needed. Do your homework in advance. Use this opportunity to gather information and take your spec vehicle for a short test drive. If your uncertainty is apparent, you may end up buying the model with the most add-on equipment, the highest sticker price and, of course, the most profit for the dealer. Before you go shopping, narrow your choices down to three or four vehicles that fit your needs.
“Oh, I’ve wanted one of these all my life.”
As soon as you’ve lost yourself in the dreamy vision of that gleaming convertible, the salesperson has you hooked, and your chances of getting a great deal are over. “Don’t get caught heavy breathing,” says Bragg. “Certainly don’t admit to your spouse – with the salesman listening in the backseat – that you’re in love with the car.” Here’s where you need to have a communication plan. Try to sound objective and rational. Point out some pros and cons and be observant and calm. Just don’t say that you have to have this car.
“I’ll take whatever the popular options are.”
Don’t ever ask for the “popular options” especially on a luxury model that already comes loaded. It’s an open invitation for overpriced dealer add-ons such as interior protection, window etching or undercoating. They’re all things you can come back for later. Instead, go through the equipment list at home after your first visit to the dealership and then decide exactly what you need.
“Sure, I’ll look at the numbers with you.”
Perhaps quite early in your visit, the salesperson will most likely make an offer to “just go look at the numbers.” Dealers do this when they sense you’re undecided, but they want to be in the position of control. Getting you in the office makes it harder for you to back out. Wait until you can call the shots of what you want at what price.
“I think you can do a lot better than that.”
Never scold or accuse the salespeople. Be polite. Compliment them, and show respect. You’ll never get the best price if you talk down to them. At least for the moment, you want them to be your friends. Let the scene play out, but leave when the deal’s not good enough by quietly suggesting that the competition across town might be more willing to work with you.